Offences relating to applications

This guidance covers offences relating to applications for registration, and the penalties for breaking the law.

Background

Solicitors act as gatekeepers for applications to register a deed or land in the land register and, therefore, there must be a level of trust between the Keeper and a solicitor acting on behalf of an applicant. The Keeper relies on the information provided by a solicitor as part of an application for registration and grants warranty based on that information provided. Where the information is false or misleading, the register is inaccurate and the Keeper must pay compensation where the inaccuracy is rectified. The policy resulting in the creation of the offence provisions in section 112 has been developed in conjunction with Scottish Government Justice Directorate and relates to the government's policy on serious organised crime and 'Safer Scotland' strategic objective. The offence links to the government strategy report 'Letting Our Communities Flourish: A Strategy for Tackling Serious Organised Crime in Scotland' and is consistent with both the 'Disrupt' and 'Deter' objectives outlined in that publication.

Purpose of the offence provision

Although the Keeper is not usually the target of fraudulent acts, the land register can be used to legitimise fraudulent applications for registration or, as part of land transactions, to launder money obtained through criminal activity. The Keeper can therefore be at risk of a claim for compensation as a consequence of false or misleading information supplied to her during the registration process. Similarly, the Keeper can also be adversely affected by the deliberate non-disclosure of certain information pertaining to an application for registration.

The offence provision is designed to deter applicants and solicitors acting on behalf of organised criminals from using the land register to validate illegitimate and criminal transactions. The offence provision is therefore a useful tool to disrupt and discourage such actions by organised crime groups and to allow for the prosecution of legal advisers who take part in criminal activity.

A solicitor who acts diligently and in good faith will not be guilty of an offence. The purpose of the provision is to act as a deterrent to fraudsters and solicitors knowingly acting on their behalf.

Offence in relation to an application

There are two ways in which an offence can be committed under section 112(1): if a person:

makes a materially false or misleading statement in relation to an application for registration knowing that, or being reckless as to whether, the statement is false or misleading, or

intentionally fails to disclose material information in relation to such an application or is reckless to whether all material information is disclosed.

The person mentioned above can be a person making an application for registration or a person acting in connection with that application, such as a solicitor or legal adviser. Unlike section 111, the offence only strikes at applicants and solicitors acting on their behalf and not granters or solicitors acting on behalf of granters. The offence only affects persons making applications for registration and does not apply to reckless, misleading or fraudulent behaviour in the course of any other type of communication with the Keeper.

The term 'in relation to an application' ensures that statements made in both the initial application for registration and in associated deeds and documents are covered by the offence provision. Section 112, therefore, captures any document supplementary to the application itself, such as any evidence submitted to the Keeper in response to a requisition.

The reckless inclusion of false or misleading information or the failure of an applicant or solicitor to disclose certain information in relation to an application for registration is at the heart of the offence and the provision in section 112 aims to encourage a solicitor or legal adviser to exercise all due diligence when making an application for registration. Put in other words, the offence aims to deter solicitors from 'turning a blind eye' to questionable actions by their clients. A genuine error will not be caught by the offence provision, for example, a minor mistake in the spelling of a name or an incorrectly input postcode is not an offence.

Defence provisions

The Act contains a number of defences for a person charged with the offence at section 112(3) to (8). It is anticipated that the defence most commonly employed will be that the accused took all reasonable precautions and exercised all due diligence to avoid the commission of the offence. This defence is only established if the accused relied upon information provided by another person and did not know and had no reason to suppose that: the information was false or misleading, or (ii) all material information had not been disclosed. An accused person can only use this defence if he or she also complies with section 112(7) and identifies the other person, or is granted leave to use this defence by the court.

A person accused of an offence can also rely on the defence that the commission of the offence was due to reliance on other people if the accused lodges a defence statement under the provisions of either (i) section 70A of the Criminal Procedure (Scotland) Act 1995 or (ii) section 125 of the Criminal Justice and Licensing (Scotland) Act 2010. Section 112(5) allows an accused to establish the defence in section 112(3) by any other way also.

Penalty

A person found guilty of committing an offence under section 112(1) is liable

on summary conviction, for a period of imprisonment not exceeding 12 months or to a fine not exceeding the statutory maximum (currently £10,000) or to both, or

on conviction on indictment, to imprisonment for a period not exceeding 2 years, to a fine or to both.

It should be noted that the offence provisions are not intended to lead to an increase in prosecutions relating to fraud but are aimed at deterring those who intentionally use the land register to legitimise criminal activity.

Application form

A warning appears on the application for registration form which reminds applicants of the effect of section 112:

Warning: it is an offence to knowingly or recklessly make a materially false or misleading statement, or to intentionally or recklessly fail to disclose material information, in relation to this application (see section 112).

Crown application

The Crown cannot become criminally liable under section 112 however the Keeper may apply to the Court of Session to have an activity by the Crown constituting a contravention of section 112 declared unlawful under the provisions of section 121 of the Act. Despite this, the offence provisions will apply to persons in the public service of the Crown as it applies to other persons.